Right to Work states have a higher standard of living

Sunday

Dec 3, 2017 at 9:49 AM

By Stan Greer

For decades, academic research by economists such as Thomas M. Carroll and Richard J. Cebula has shown that one side benefit of state Right to Work laws, which prohibit forced union membership, dues and fees as a condition of employment, is that they can help reduce the cost of living in jurisdictions where they are in effect.

It has long been well-documented that the relative cost of housing, food, medical care, energy and other necessities is significantly lower on average in Right to Work states than in states with compulsory unionism. But prior to the beginning of the 21st Century, it was difficult to document whether or not the cost of living in a state was rising, falling, or holding steady, compared to the national average, over time.

But soon after the Missouri Economic Research and Information Center (MERIC), a state government agency, was launched in 2001, it began calculating and publishing indices ranking the 50 states for relative cost of living on a regular basis. MERIC tracks the overall cost of living for a state as well as the cost of housing, groceries, health care, utilities, transportation and other miscellaneous consumer goods and services. Its indices are updated four times a year.

Thanks to MERIC’s indices, it is now possible to gauge the impact of changes in a state’s relative cost of living, compared to other areas of the country, on the growth in purchasing power for that state’s residents. And in recent years, MERIC’s data show the aggregate cost of living has been increasing more rapidly in states that still lack Right to Work protections for employees than in Right to Work states.

It is obviously important to take this fact into consideration when one is seeking to assess the economic impact of the six state Right to Work laws adopted since the beginning of 2012. To illustrate the point, here I will focus on Indiana, where then-Gov. Mitch Daniels signed the 23rd state law prohibiting forced union dues and fees on February 1, 2012.

According to the U.S. Commerce Department, from 2011 (the last year prior to the Right to Work law’s enactment and taking effect) through 2016, disposable income per capita in Indiana grew by 15 percent, an increase greater than the national average and well over double nationwide inflation as measured by the Consumer Price Index.

But MERIC’s cost-of-living indices for 2011-16 show the official Commerce data actually greatly understate the improvement in living standards Hoosiers have enjoyed, especially relative to residents of the 24 states that still had not passed Right to Work laws as of the end of 2016.

Over the course of 2011, Indiana was 20.2 percent less costly to live in than these 24 forced-unionism states. With differences in purchasing power accounted for, Indiana’s per capita disposable income was roughly $1,360 higher than the average for the big labor-dominated states at that time.

By 2016, the annual average cost of living in Right to Work Indiana was 24.9 percent below the average for the remaining forced-unionism states. And Indiana’s cost of living-adjusted per capita disposable income was more than $3,800 higher than the average for those same states.

Over the past five years, Hoosiers’ real purchasing power has increased more rapidly than that of residents of the remaining forced-unionism states in the Midwest in particular, as well as forced-unionism states nationwide.

Take, for example, Missouri, whose Right to Work law was adopted only this year, and has now, because of a Big Labor-engineered petition drive, been temporarily suspended pending the outcome of a statewide referendum expected to occur in November 2018.

In 2011, Missouri’s cost of living-adjusted disposable income per capita was nearly $500 higher than Indiana’s. But as of last year, the average Hoosier had roughly $2,000 more in real purchasing power than the average Missourian.

Big Labor propagandists in the Show Me State are brazenly telling Missouri voters that, if they heed the union bosses’ siren song next year and reinstate forced unionism, Missourians’ living standards will somehow rise as a consequence.

The fact is, the union hierarchy’s PR claims aren’t remotely supported by the experience of Indiana and other states that have enacted Right to Work laws. And to understand just how wrong these claims are, one has to refer to the interstate cost-of-living data furnished by MERIC, which happens to be based in Jefferson City, the Show Me State’s capital.

Stan Greer is a senior research associate with the National Institute for Labor Relations Research.

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